Kenya Airways inks deal to sell redundant aircraft to US airline

Wednesday January 13 2016

National carrier Kenya Airways has announced that it has entered into a sale agreement with US-based airline Omni Air International for two of its Boeing 777-200 ER aircraft. PHOTO | DIANA NGILA | NATION MEDIA GROUP

In Summary

The deal follows approval from its board, marking the start of a turnaround strategy that includes disposing of its redundant fleet.

Late last year, the airline said selling redundant aircraft had become part of its turnaround strategy, amid hopes that the move would help it cut costs and improve its prospects.

The airline showed signs of recovery last year with a significant reduction in its operational losses despite recording a loss after tax of Sh11.9 billion.

National carrier Kenya Airways announced on Wednesday that it had entered into a sale agreement with US-based airline Omni Air International for two of its Boeing 777-200 ER aircraft.

The deal follows approval from its board, marking the start of a turnaround strategy that includes disposing of its redundant fleet.

Kenya Airways announced its intention to sell the B777-200 fleet in November 2014 as it sought to reorganise its fleet, as part of the strategy.

“I am pleased that we have reached this milestone. Although we announced our intention to rationalise our fleet in line with our current position more than a year ago, it has taken a while to find a good home for our B777-200.

"We are now satisfied with this sale and will make other important announcements on fleet rationalisation soon,” said Kenya Airways Group Managing Director and CEO Mbuvi Ngunze on Wednesday.

Riding on Project Mawingu, an ambitious expansion plan headed by former chief executive Titus Naikuni that included purchasing new aircraft to modernise its fleet, KQ has been pushed into losses in recent years, with the airline’s debt standing in excess of Sh130 billion at one point last year.

Late last year, the airline said selling redundant aircraft had become part of its turnaround strategy, amid hopes that the move would help it cut costs and improve its prospects.

Besides the fleet rationalisation plan, the airline’s broader strategy involves cutting operational costs, enhancing worker productivity and improving its pricing to attract new customers in the face of stiff competition from peers.

RECOVERY SIGNS

The airline showed signs of recovery last year with a significant reduction in its operational losses despite recording a loss after tax of Sh11.9 billion for the six months ending September 2015, compared with a net loss of Sh10.5 billion in 2014.

KQ executives at the time said the airline had made significant savings through cost containment and rationalisation of its operations.

The two sold aircraft will leave for their new home in the next two months, the airline said in its statement.

The disposed aircraft are part of a fleet delivered new from Boeing to Kenya Airways between 2004 and 2007.

“The first one will be transferred by the end of January,” the airline noted, adding that the two aircraft were operated on its long-haul scheduled routes, especially to Asia and Europe.

Omni Air International is a privately owned and managed carrier that provides worldwide passenger charter operations.

It says on its website that as part of its lease programme it provides aircraft, “complete crew, maintenance and insurance to a diverse customer base including tour operators, scheduled and charter airlines, cruise lines, corporations (shuttles and incentive programs), sports teams, alumni groups, and global government agencies”.

The two sold aircraft, KQ said, are currently configured with 28 business and 294 economy seats.